Day 251: Living Income Guaranteed and Market Mechanics

This blog is in response to a comment made on Day 250: Economics Nobel Prize reduced to Laughingstock :
“Economics is about, or should be about, how to employ the available means in such a way that no want more urgently felt should remain satisfied because the means suitable for its attainment were employed - wasted - for the attainment of a want less urgently felt. This is what it means to economize: to allocate scarce resources to their most productive/urgent use. "Most urgent use" is determined by supply and demand as established on the free market. I agree with the criticism that empirical economics seem frivolous and misplaced. But I disagree with the conclusion of this article; the only way to make the world more wealthy is by increasing the ratio of capital to people through investment and savings. Wealth redistribution will only succeed in making us all equally poor. Well written piece, though, thank you for a thoughtful opinion.” - Matt Summers

“Economics is about, or should be about, how to employ the available means in such a way that no want more urgently felt should remain satisfied because the means suitable for its attainment were employed - wasted - for the attainment of a want less urgently felt. This is what it means to economize: to allocate scarce resources to their most productive/urgent use. "Most urgent use" is determined by supply and demand as established on the free market.”

The effectiveness of markets in being able to successfully allocate resources to ‘their most productive/urgent use’ is dependent on how effectively the market is able to capture supply and demand signals. Here, we currently have a problem as not everyone has an equal opportunity to access the field of the free market and cast their demand / signal their need. Access to the free market is restricted, and the only way to gain access is by having a ticket – where one’s ‘purchasing power’ is representative of such a ticket that will grant you access.

So long you do not have the money / financial means to back up your demands, your demands will fall on deaf ears and not be catered for. Alternatively, depending on the scope of purchasing power available to you, your demands may only be catered for partially, as you are unable to ‘validate’ or ‘redeem’ all of your needs into demands due to the size and scope of one’s purchasing power – and thus the free market will only pick up one those demands/needs that are backed up by purchasing power, while not registering others.
With not everyone’s demands in effect being picked up by the market, we get a distorted view and picture of what we believe is wanted/needed - and use this distorted picture as a map to allocate scarce resources. To actually be able to direct and allocate resources to their most productive and urgent use, we require a lot more information – information that is missing and not being received simply because not everyone has the capacity to validate their demands through purchasing power.

Whether we like it or not, we currently live in a world with huge levels of income inequality^[1] and thus purchasing power inequality – where there is an inverse relationship existent between the size of purchasing power and the amount of people who have purchasing power.
In terms of the mechanics of Supply and Demand, this structure gets translated into the market receiving a big amount of information about the demands of a few people, while receiving little to no information from the majority of the people who have smaller to no purchasing power.

Within providing a Living Income Guaranteed, the goal is not to ‘equalize’ the entire purchasing power structure – but merely to give those at the bottom / those who do not have access to the market mechanisms -- the chance to be heard and recognized within the market. Providing a Living Income Guaranteed effectively provides everyone with a base amount of purchasing power, so that at a minimum everyone can effectively signal their demands to be able to achieve a dignified living standard.

“Wealth redistribution will only succeed in making us all equally poor.”

Here I will assume that your statement is based on the same logic Nozick follows, where he perceives a problem in redistribution leading to disincentive for the productive members of the economy who would then produce less and less until they cover only their immediate needs and having no ‘surplus’ to redistribute.
In terms of the Living Income Guaranteed proposal, where we want to ensure that those who are unable to sustain themselves financially through providing them with a Living Income – we are not looking at a massive movement of redistribution. In terms of the capital and wealth that is available within the world, it only takes a small fraction^[2] being moved from top to bottom to give the majority of people the necessary ‘bump’ to be able to realize a dignified living standard for themselves.
There will thus still be a wide range of incomes, a wide range of competition and more than enough incentive to be innovative and keep producing.

A more drastic change will rather be seen within the market system within the mechanics of supply and demand being able to capture a lot more information about the needs and wants of people – which will provide society with more effective and accurate guidelines as to where resources should be allocated for their most productive/urgent use. The biggest change will be seen in the living standards of people and the actual realization of having everyone’s fundamental human rights secured.

Here, we can look for instance at the ‘ideal’ many people envisage when looking at the distribution of wealth in society. As you can see from the graph below, it still leaves plenty of incentive for those who are incentive driven to be productive and innovative – while at the same time allowing the bottom two quintiles to have sufficient wealth to live a dignified life (and to have any share of wealth at all for that matter! Since both the first and second quintile barely get registered on the ‘actual’/’current’ graph).

The Nozickian notion that redistribution will ‘leave us all equally poor’, is a very radical and extremist position, which takes on a very rigid and narrow view on human nature and values. It is assumed that we only care about ourselves and within this will go as far as compromising and sabotaging our own living standards just because we don’t want anyone else to reap benefits of ‘our work’ and ‘our effort’. There is no space for relating to one another and helping each other out – even when it comes down to something basic such as having everyone’s fundamental human rights covered. We suggest that humans are not the completely irrationally selfish beings Nozick assumes us to be, and that we are capable of compassion and can realize this compassion in the form of having everyone’s fundamental human rights secured.

“But I disagree with the conclusion of this article; the only way to make the world more wealthy is by increasing the ratio of capital to people through investment and savings.”

This statement is not necessarily true – as it assumes that we are currently experiencing a ‘lack’ in real capital and actual resources to effectively provide everyone with a proper living standard. The capital and the resources are already here – but through the market system operating at an inefficient level (due to our current supply and demand curves not capturing the full extent of demand as explained above), the capital/resources are not moving and not being directed towards those who need it most.

This is how we end up with scenarios of food dumping and having huge amounts of food destroyed and thrown away parallel to having high levels of hunger and starvation in the world. This is simply because our economic system is not sensitive and attuned to human needs and instead being irrationally driven by the profit motive. Economics and the market have become all about non-human elements as profit and numbers which have stopped serving the general human interest. By placing in a Living Income Guaranteed system, we are placing the human element back in the center of economics, allowing economics to be the life supporting instrument that it was destined to be. Economics and money are then here to support ourselves in living our life – and not the other way around where are lives are lived in the service of money and the economy, as how the majority of people’s lives are currently being lived.
It’s time to reverse the roles.
 
[1] See our blog on the World’s Lorenz Curve, which displays almost perfect inequality “Day 143: The Neo-Apartheid Era”
[2] See “World’s 100 richest could end global poverty 4 times over”, which is but one example of ‘how little it takes’ to make a ‘big difference’ for many

Related articles

• What is the Living Income Guaranteed?
• The Pope on Inequality and Unfettered Markets
• Day 251: Living Income Guaranteed and Market Mechanics
• Day 252: The Rich Be Cursed, The Rich Be Blessed
• Day 226: Living Income Guaranteed will Prevent Destruction of Homes

Related articles

Day 189: Will your Level of Education Determine your Income in EMC?

This blog post is in relation to a comment placed on one of our previous blog-posts - you can check out the full comment at http://economistjourneytolife.blogspot.com/2013/02/day-188-simple-solutions-in-equal-money.html

~ Since I am the one who made the comment, I will rebuttal your response also.
First you are comparing green apples to red and saying they are worth the same at the register, which I tend to agree with. But, my comment was based more on someone that had 4 yrs of college or previous experience to someone who dropped out of high school.

We can not dismiss the expense of a higher education, or the value of years of previous experience, by paying say a gas station attendant of fast food server the same as the doctor or technician you spoke of. Indeed a doctor or technician, and even a plumber, electrician, or carpenter are needed just as much in today’s society.

Understand that within Equal Money Capitalism – education will no longer be a point of ‘investment’ from which you are expecting ‘returns’. This is one’s approach currently as the result of our environment which promotes competition and profit for the sake of self-interest where it’s ‘each one on his own’ – and is in essence an approach based within survivalism. There’s not enough jobs for everyone to go around with, and so people chose an education and career according to the prospect of money linked to that education/career. This is not a real decision/choice made within the consideration of one’s passions and interest – but based on a fear of not making it within this world and ending up with nothing. People who’ve currently  gone through a process of education and spent a lot of money and work getting there experience a sense of entitlement towards ‘getting a good pay’ – but only because they have experienced the process they went through as being an unpleasant one. If it wasn’t for the reward as ‘a good pay’ – these people wouldn’t have made the same education and career choices. Studying and working for an extended period of time to do a job you love and care about will be the reward itself. Within that, you are not going to be comparing yourself with what other people are doing and what process they went through – because what you are doing and the decisions you have made are merely the common sense outflows/results of your passion and what it is you like to do within Life. So, you’re not going to receive extra compensation for your perceived suffering, because you will not be going through a process of suffering. One’s approach towards education and careers will thus change completely.

In terms of financial investment, education is a basic human right, and thus will be provided by the government through tax-monies. In other words – you won’t have to pay for it specifically, because it is part of the ‘package’ you receive as part of your basic rights within developing yourself to your utmost potential. So – here, again, you will not be spending more money on an education for a doctor or any other type of education – so, here, again – there will not be a sense of ‘deserving’ a higher pay because one spent more money on study fees or study loans.

But there again we can very well pay someone who just started in the trade and has little knowledge or skills, the same as someone who as invested several years into learning and refining their trade. There are different values to ones experience within their chosen specialty, A company cannot afford to pay the unskilled as much because they aren’t capable of doing the job themselves.

Within Equal Money Capitalism the only value worth valuing is Life. It’s not about who can do what job or who went through what process of Education – it’s merely a point of you are here, you are alive and thus you will be supported to remain Life. The idea that a company cannot afford to pay the unskilled is merely the outflow of having polarized wages. Where those who are considered having a ‘special position’ receive way larger sums of income than those who are considered to be within an ‘average’ work position. Once this polarization is out of the way – there will be enough money to go around to reach everyone. Realise also that within the context of an Equal Money Capitalistic System – there will be no such thing as ‘an unskilled worker’.  Once one has completed one’s primary education,  a person will be multi-skilled and capable of a multitude of tasks due to the broad spectrum of education that will be in place.

If you start demanding that all employees and people are paid the same, then what happens is the less experienced workers begin to loose there jobs and their job opportunities as employers begin to limit their hiring to only skilled and experienced candidates. This creating a less people with experience because they can’t get any, and higher demands on the fortunate few who are working. Not to mention higher costs and shorter supplies of said products.

This will not be the case because in terms of equalizing wages – you will still end up with the same amount of costs in terms of paying out wages (if not less) – and as such there should be no reason why one would hire someone whose “overqualified” so to speak to do a job that someone who is less skilled can do at the same level of effectiveness. In addition, the labour market will not operate according to supply and demand. Providing employment forms part of a company’s social corporate responsibility. And decision-making such as you’ve outlined above would be considered unethical. Whenever a person no longer requires to perform a particular job within a company, the company is responsible to provide it with a different task. For companies to just take away a person’s income, which is a person’s lifeline is unacceptable. With such principles in place, it will be in the company’s best interest to ensure that each worker is trained to the best of their ability and to make appropriate matches between a person’s skill-set and their role in the company.

Day 29: The Right to Profit

I forgive myself that I haven’t accepted and allowed myself to see and realise that the right to profit is the only right being upheld, maintained and protected at all cost within our world

I forgive myself that I have accepted and allowed a world economic , social and political system where the right to profit stands above all other rights – even though it is not officially declared as a human right

I forgive myself that I have accepted and allowed myself to have created a world where the right which gets the most attention and protection is the right to make profit – and where any tools, media and information can and are used to infiltrate the human mind to turn everyone into consumer robots in the name of profit

“I think of a child’s mind as a blank book. During the first years of his life, much will be written on the pages. The quality of that writing will affect his life profoundly.” – Walt Disney

I forgive myself that I have accepted and allowed myself to have created a world system where it is not only okay – it is encouraged to go and brainwash children and parents with cartoons, movies, games and software -- as this is an effective method to reap profit and thus completely justified

I forgive myself that I have accepted and allowed myself to have created a world where it is normal for corporations to take over the parenting and teaching job from parents – where they will teach the children and feed the children the information which will turn them into the best consumer slaves

I forgive myself that I haven’t accepted and allowed myself to see and realise that all Basic Human Rights are being directly violated within upholding this one right as The Right to Make Profit

I forgive myself that I haven’t accepted and allowed myself to see and realise that The Right to Profit leads directly to The Right to Abuse – as all is justified as long as it serves the accumulation and growth of wealth

I forgive myself that I haven’t accepted and allowed myself to see and realise that the Right to Profit equal the Right to Steal, the Right to Manipulate, the Right to Threaten, the Right to Destroy, the Right to Lie, the Right to Kill, the Right to Harm. the Right to Enslave – all of which equals the Right to Abuse

I forgive myself that I haven’t accepted and allowed myself to see and realise that a system of Profit will always imply Abuse as one is getting more than what is given – where the Earth has given us unconditionally – yet we are not being unconditional back – as we’ve accepted and allowed ourselves to see Earth, nature and all its inhabitants – humans and animals alike – to be merely as inputs and factors of production within the giant Money Making Machine – where we do not care who dies or what gets destroyed as long as we can squeeze the maximum amount of profit out of it

I forgive myself that I have accepted and allowed myself to have created a world system which only cares about profit – where points will be in place such as education and health care which appear to be “services” to humans – but where we are being ‘serviced’  to ensure the proper functioning of the human capital as factors of production and to be proper consumers

I forgive myself that I have accepted and allowed a world system where everything and everyone gets considered only through the perception filter of profit – where everything and everyone’s value is measured and evaluated in terms of profit and loss as positive and negative experiences and where there is no space whatsoever for any considerations towards the Earth, Nature, Animals and Humans and how decisions affect the whole – where the consideration of “What’s Best for All” is non-existent

I forgive myself that I haven’t accepted and allowed myself to see and realise that current state of the world and how humans run and manage the world – is completely and utterly irrational – as if we once upon a time entered a game of monopoly and forgot that we’re only playing a game – where everyone has become so dead serious about the game and the fictional money that we’ve started to believe it is real while it is NOT – and where all the rules and policies in the world are set up to protect the MADE UP game and the FAKE money while REAL people die and suffer

I forgive myself that I haven’t accepted and allowed myself to see and realise that his implies that the world is in one big massive state of mind possession

I forgive myself that I haven’t accepted and allowed myself to see and realise that the current money game has run out of control to the extent that we are destroying ourselves and our planet



I commit myself to expose the violation of Human Rights and Crimes to Life within the silent agreement that the Right of Profit is the Right of all Rights

 I commit myself to expose the brutal reality that the Right to Profit is in fact the statement of the Right to Abuse

I commit myself to expose the illusion of “support structures” within this world as they are only hear to support us as labourers and consumers and not as unconditional support as LIFE

I commit myself to expose the extent of the brainwashing / possession / mind control taking place within the world where all have become blind to the massive amount of suffering taking place every single day

I commit myself to show that we have completely disregarded  Life and only consider things and other living beings in terms of how they can aid us in our achievement and accumulation of profit

I commit myself to expose that profit in its very essence implies Abuse

I commit myself to the establishment of a new value system which Values life as the Equal Money System to restore the atrocities we have done unto another and the Earth

Day 18: Who's Got the Most to Lose - The Rich or The Poor?

I forgive myself for accepting and allowing myself to believe that it is righteous that the owner of a company gets to make profit from running a business because he deserves it.

I forgive myself for accepting and allowing myself to believe that the owner of a company deserves to make profit from this business because in starting this company, he invested his money and herein took an apparently very courageous risk and should therefore be rewarded with profits.

I forgive myself for accepting and allowing myself to not realise that the person investing to start a mining company, though he bets with a lot or all of his money, still has less to lose than the miner who might lose his life working in the mine - and therefore, that there is no rationale that justifies profit.

I forgive myself for accepting and allowing myself to actually believe that the person who puts all his money on the line possibly loses more than a person putting his life on the line - and I forgive myself for accepting and allowing myself to herein justify a company making their employees work in crappy conditions in order to lower costs and increase profits, while the employees' lives are increasingly at stake.

I forgive myself for accepting and allowing myself to actually believe that the boss sitting at his desk making phonecalls deserves to get a higher income than the workers at the lowest level who do the actual hard, physical labour.

I forgive myself for not accepting and allowing myself to realise that if I want to pursue the line of thought as justification of 'those who earn more money do so because they deserve it', then all the workers doing the actual hard physical labour should be the ones who get the highest incomes, because they do the jobs those with higher incomes don't want to do - indicating that they are giving more of themselves in their job.

I forgive myself for accepting and allowing myself to accept that so many laws and regulations exist to protect the rich and their wealth from the poor, while mostly the rich are born rich and have therefore barely deserved any of their wealth.

I forgive myself for accepting and allowing myself to deliberately exclude the poor from becoming wealthier by making capital a prerequisite for making money and accumulating wealth - and on top of that making sure that poor people can't get loans to get capital with to be able to participate and become wealthier in the economy.

I forgive myself for accepting and allowing myself to claim that the poor are in their position because of laziness, while actually deliberately creating the barriers that keeps them from any significant participation in the economy as a strategy to rule out competition.

I forgive myself for not accepting and allowing myself to realise that as long as we as humans compete with each other in any aspect of our lives and as long as we are afraid of coming out the short end in losing everything we have, we will never live in a world where poverty is eradicated, because poverty is merely a consequential outflow of the designs of competition and fear of loss.

I forgive myself for not accepting and allowing myself to realise that each one requires to investigate their life and see where it is that they are participating in competition and fear of loss, and where they try to take out competition and remain 'on top of them' in the nastiest of ways, if we ever want to see a change in this world.

I forgive myself for accepting and allowing myself to believe that competition and fear of loss are part of 'what makes us human' and that we cannot live without such experiences, or that we would no longer be ourselves.

I forgive myself for not accepting and allowing myself to realise that competition and fear of loss cause consequences in our and others' lives of suffering, pain and misery.

I forgive myself for not accepting and allowing myself to realise that I can never lose myself and therefore, it is absolutely possible to stop the habit, need and desire to compete with others and to give up fear of loss and still be here.

I forgive myself for not accepting and allowing myself to realise that self-improvement should be about self, for self and not about trying to be better than and outshine others - self-improvement is about correcting the relationship one has with oneself in a way that there is no conflict with self, in self, towards self and self can live fully in every moment.

I forgive myself for accepting and allowing myself to define self-improvement in relation to how well I perform in comparison to others and use others and what others think of me as a benchmark for where I need to go or what I need to change, instead of realising and understanding that self-improvement is about looking at where I am not satisified with me, equal and one with me and to correct those points accordingly and where then, others who have already walked the particular point I'm busy correcting can assist and support in being an example where I then equalises myself to others, but not from the starting point of trying to outrace them or trying to outshine them.

I forgive myself for not accepting and allowing myself to realise that we cannot walk this process of change on our own and need to be able to stand as a group of equals, as one, to see the change we need in the world - and herein competition is unacceptable.

I commit myself to stop all desires, needs, wants, tendencies to compete with others in and as myself.

I commit myself to stop all forms of fear of loss within and as myself.

I commit myself to learn to work together as a group of equals as one, instead of against each other.

I commit myself to show how the current economic system works like a casino where each one places their bets, in terms of their capital, their life, their time, their efforts, their health - and where some can continue playing and others just lose it all.

I commit myself to the implementation of an Equal Money System where each everyone is always a winner and no-one loses out.